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A Resolution Authorizing the Execution of a Loan Commitment and Agreement for The Day Nursery
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Introduction
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The Day Nursery, a long-time early childhood educational provider in Oak Park focused on a safe, affordable, and enriching environment for children, will close without additional financial assistance. Staff are proposing a loan to The Day Nursery for $246,532, which would provide it with an additional eight months of operations, allowing it time to develop a plan for sustainability.
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Recommended Action
Adopt the Resolution.
Prior Board Action
The Board has taken the following prior action(s):
• RES 23-83: A Resolution Approving a Funding Grant Agreement Between the Village of Oak Park and the Collaboration for Early Childhood in an Amount Not to Exceed $1,109,300 and Authorizing its Execution
• RES 19-281: Resolutions Approving the Program Year (PY) 2019 Community Development Block Grant (CDBG) and Emergency Solutions Grant (ESG) Agreements with Subrecipients and Authorizing their Execution.
Background
The Day Nursery is a long-time early childhood educational provider in Oak Park focused on a safe, affordable, and enriching environment for children. They currently serve 66 children, 30 of whom are from Oak Park residents. The Day Nursery has long focused on serving households from a variety of economic backgrounds. That continues today; The Day Nursery is one of only two child care providers in Oak Park who currently work with the State of Illinois’ Child Care Assistance Program. That program helps pay for affordable child care for households with low incomes. Of the 66 children currently served by The Day Nursery, 56 receive a subsidy like the Child Care Assistance Program, 23 of whom are Oak Park residents.
While The Day Nursery has always served households from a variety of backgrounds, the student mix changed after COVID, with the share of children served by the Child Care Assistance Program increasing. This, in turn, has led to larger operating deficits because the state’s reimbursement rate for the Child Care Assistance Program is far less than the cost of providing care for the child (closer to half of the cost for The Day Nursery). The repayment rate is why many other early childhood educational providers do not enroll children served by the Child Care Assistance Program, limit their enrollment, or charge additional fees to such households to make up for the reimbursement gap.
For the current fiscal year (July 24 - June 25), The Day Nursery is losing about $24,900 per month, an annualized loss of approximately $299,000. This is similar to the loss of the previous fiscal year (July 23 - June 24). The Day Nursery lost $22,800 per month, or about $275,000 in a year. The Day Nursery has made up for these losses through its reserve fund, though that is about gone (balance of less than $70,000 currently). The Day Nursery projects its losses to be similar in the next fiscal year (loss of about $30,500 per month and $366,000 per year). Fundraising has been, and remains a struggle. The Day Nursery received about $105,000 in gifts and fundraising this fiscal year. In late April the Village was approached by The Day Nursery, alerting us to their intent to shut down without financial intervention.
Staff are proposing that the Village provide The Day Nursery with a no-interest, forgivable loan of $246,532. This loan would allow The Day Nursery to continue operating through January 2026. In that time, The Day Nursery would need to:
- Develop a plan for long-term sustainability.
- Fundraise an operating reserve of $100,000 by January 31, 2026.
- Fundraise an operating reserve of $150,000 by January 31, 2027.
- Fundraise an operating reserve of $200,000 by January 31, 2028.
If The Day Nursery is successful in the long term, the loan could be forgiven beginning in 2035 (one-tenth of the loan amount each year between 2035 and 2045).
If The Day Nursery is unsuccessful in reaching sustainability, the Village’s funding would be repaid out of the sale proceeds of the land. There are no current loans on the properties. The Day Nursery has an outstanding $150,000 loan with the Small Business Administration (SBA). If The Day Nursery filed for bankruptcy the Village’s loan would be secondary to that of the SBA loan. The Village would also have a right of first refusal to purchase The Day Nursery site, in whole or in part.
The Day Nursery owns approximately 25,000 square feet across four different lots. Three of the smaller lots (along Harlem and at the south end of their site) contain no buildings. The Day Nursery building is on the fourth and largest parcel. It is housed in a landmark Tudor-style building at the corner of Randolph and Harlem in Oak Park. Charles E. White, an architect who worked in the Oak Park studio of Frank Lloyd Wright, designed the building specifically for the Day Nursery, in 1926. The building was designated an Oak Park Historic Landmark in 2002.
Timing Considerations
The Day Nursery had indicated that it intends to shut down operations imminently due to a lack of reserves to continue funding deficit operations.
Budget Impact
Funds to provide a loan to The Day Nursery were not authorized in the 2025 budget. Staff proposes to use a portion of the fund balance for the loan.
Staffing Impact
There is no Village staffing impact associated with this item.
DEI Impact
The Day Nursery currently serves 66 children. This includes:
- 23 children from Oak Park who receive a subsidy like the state’s Child Care Assistance Program.
- 33 children who live in other communities who like the state’s Child Care Assistance Program.
The Child Care Assistance Program supports income-eligible households with the financial burden needed to pay for child care while working or going to school. The Day Nursery is one of only two child care providers in Oak Park who currently work with the Child Care Assistance Program. The other local program does not/would not have the capacity to enroll all of the current children enrolled at The Day Nursery if it closed. The financial assistance from the Village provides The Day Nursery a runway to develop a plan for long-term sustainability, preserving this critical childcare option for income-eligible households in Oak Park.
Community Input
This item has not been reviewed prior by a committee or commission.
Staff Recommendation
Staff are recommending that the Board adopt the resolution, thereby authorizing staff to enter into the agreement, mortgage, and note, providing The Day Nursery with $246,532 to continue operations.
Advantages:
• Allows the temporary continuation of an important childcare provider who is primarily serving income-eligible households in need of childcare services for eight additional months, providing them time to develop a plan for future sustainable operations.
• Provides the Village with a right of first refusal to potentially acquire The Day Nursery site, in whole or in part, if The Day Nursery were unable to develop a plan for sustainability.
Disadvantages:
• Staff estimates that the funding provided by the Village will extend operations of The Day Nursery for approximately 8 months. This is not a full operational year of funding, nor a long-term plan for sustainable operations. The Day Nursery must still do substantial work to develop and then implement such a plan.
Alternatives
Alternative 1:
The Board could choose not to enter into the loan.
Advantages:
• By not entering into the loan, the Village would retain $246,532 in the fund balance, allowing for its potential use on other priorities.
Disadvantages:
• The Day Nursery cannot continue operating without additional funds. By not entering into the loan, The Day Nursery would need to end operations, thereby reducing the availability of childcare options affordable to households with low and moderate incomes in Oak Park.
• The Village would not have a right of first refusal to potentially purchase The Day Nursery site if The Day Nursery were to cease operations.
Alternative 2:
The Board could choose to enter into a loan for a greater amount than recommended.
Advantages:
• A larger loan would allow The Day Nursery a longer runway to develop a plan for sustainability.
• Allows the temporary continuation of an important childcare provider who is primarily serving income-eligible households in need of child care.
• Provides the Village with a right of first refusal to potentially acquire The Day Nursery site, in whole or in part, if The Day Nursery were unable to develop a plan for sustainability.
Disadvantages:
• A larger loan would use a greater amount of the fund balance, which can be used for other critical community needs in a moment of uncertain funding at other levels of government.
Anticipated Future Actions
No future actions are anticipated.
Prepared By: Jonathan Burch, Assistant Village Manager/Neighborhood Services Director
Reviewed By: Ahmad M. Zayyad, Deputy Village Manager
Approved By: Kevin J. Jackson, Village Manager
Attachment(s):
1. Presentation
2. Resolution
3. Draft Loan Commitment and Agreement
4. Draft Mortgage
5. Draft Note
6. Day Nursery YTD 2025 statement of activity
7. Day Nursery YTD 2025 financial position
8. Day Nursery 2023/2024 audit
9. Day Nursery demographic information